Spirit Aero's free cash flow target disappoints; shares fall

(Reuters) - Shares of Spirit AeroSystems Holdings Inc (SPR.N) slumped as much as 10 percent on Friday after the aircraft parts maker said higher capital expenditure would take a toll on its 2018 free cash flow target.

The company, which makes sections of the fuselage, wing frame work and structural components, plans to ramp up production as robust demand for air travel encourages two of its biggest customers, Boeing Co (BA.N) and Airbus (AIR.PA), to lift delivery targets.

Savings from changes to the U.S. tax code will be used for “high-return” capital expenditures and research and development activities, Chief Executive Tom Gentile said in a statement.

The comments come as several U.S. companies have said they would return at least a portion of their tax gains to shareholders through buyback and dividends.

Wichita, Kansas-based Spirit Aero’s shares were on track to post their worst intraday percentage loss in nearly two years.

Free cash flow, a measure of how much cash a business generates after accounting for capital expenditures, is expected to be between $550 million and $600 million in 2018, the company said.